Welcome Stockaholics to the trading week of September 21st! This past week saw the following moves in the S&P: Major Indices End of Week: Major Futures Markets on Friday: Economic Calendar for the Week Ahead: What to Watch in the Week Ahead: Monday 6:00 p.m. New York Fed President John Williams 12:00 p.m. Fed Governor Lael Brainard Tuesday 10:00 a.m. Existing home sales 10:00 a.m. Chicago Fed President Charles Evans 10:00 a.m. Fed Chairman Jerome Powell, Treasury Secretary Steven Mnuchin at House Financial Services on coronavirus aid Wednesday 9:00 a.m. FHFA home prices 9:00 a.m. Cleveland Fed President Loretta Mester 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI 10:30 a.m. Fed Chairman Powell at House Select Subcommittee Committee on Coronavirus Crisis 11:00 a.m. Chicago Fed President Charles Evans 12:00 p.m. Boston Fed President Eric Rosengren 2:00 p.m. Fed Vice Chairman Randal Quarles Thursday 8:30 a.m. Initial jobless claims 10:00 a.m. New home sales 10:00 a.m. Fed Chairman Powell, Treasury Secretary Mnuchin at Senate Banking Committee 1:00 p.m. Chicago Fed’s Evans 2:00 p.m. New York Fed’s Williams Friday 8:30 a.m. Durable goods 9:00 a.m. New York Fed’s Williams 3:10 p.m. New York Fed’s Williams
Stocks Suffer Longest-Losing Streak In Over A Year As Dollar Dump Continues Stocks are down for the 3rd week in a row - yeah we know!!! - leaving levered-call-buying RH'ers facing something they likely haven't seen in their trading careers (this is the longest losing streak since August 2019)... The Dow ended the week almost perfectly unchanged. This leaves The Dow down over 3% YTD and the S&P 500 up just over 2% YTD... Source: Bloomberg Is it time for The Fed to start "getting back to work" on their balance sheet now that rates are impotent... Source: Bloomberg All that 'work' and "you get nothing"... The S&P 500 and Nasdaq closed below their 40DMAs. Small Caps managed to bounce off the 50DMA (after breaking below) and The Dow bounced perfectly off it... FANG Stocks plunged to their lowest since late July (down 17% from the highs)... Source: Bloomberg Very choppy week in quant-factor land with Value and momentum swapping places day after day... Source: Bloomberg Notably, Quad Witch sparked some shenanigans in the vol-stock complex today... Source: Bloomberg And the Gamma pivoted around 270 Strike for Nasdaq QQQ... Despite equity weakness, Treasury yields rose very modestly on the week... Source: Bloomberg The Dollar Index fell this week, after two weeks of gains... Source: Bloomberg Cryptos were largely higher on the week (Litecoin lower), led by Bitcoin Source: Bloomberg Bitcoin was, however, unable to hold on to $11k... Source: Bloomberg Oil dominated commodity-land with copper also higher and PMs marginally so... And a big reversal in WTI (back above $41)... Ags had a huge week as Corn, Soybeans soared on China chatter... Source: Bloomberg Finally, 1930 called again... Source: Bloomberg
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
Seasonal Volatility Just Getting Started Fri, Sep 18, 2020 The market's day-to-day volatility has picked up in September after experiencing more stable trading action during the summer months. This is not out of the ordinary. Historically, the most volatile time of the year for stocks has been between September and early November. You can see this in the chart below that shows the average absolute daily percentage change for each trading day of the year beginning on the first trading day of January through the last trading day of December. As shown, daily volatility is very consistent around the +/-0.70% level over the first eight months of the year, but then it starts to pick up beginning in September until it reaches a peak during the first week or two of November. From there, the holiday season takes over and daily volatility plummets right through the end of the year. As shown in the chart, unfortunately we've still got a ways to go to get to the top of the volatility mountain, so make sure you've got your climbing gear ready for the next six to eight weeks! Keeping Tabs On High Frequency Growth Fri, Sep 18, 2020 The week ended September 11th showed a sharp decline in our index of weekly GDP versus the year before. As shown, our index can be quite volatile, but it does do a decent job tracking the general trajectory of GDP. Since peaking at an implied growth rate of +0.9% YoY on July 10th, our index has slid to -2% YoY, the lowest reading since mid-June. Taking a look at another tracker of short-term economic growth, below we show Weekly Economic Index data updated by the New York Fed each week. After decelerating sequentially YoY for the week ended September 4th, the WEI reported sequential YoY growth slower once again in the week ended September 11th. We also show what each high frequency tracker implies about quarterly growth. As shown, our tracker has consistently implied a higher quarterly growth rate than the Weekly Economic Index, and official data for the last two quarters. That said, Q3 is tracking at least 20%, with upside to the high-20s as the US continues to rebound from COVID. This post was originally published in our post-market macro report -- The Closer -- last night. Election Charts You Need To See: Part 3 One of the top requests we’ve received the past few weeks is for more charts on the US elections. We shared some of our favorite in Election Charts You Need to See: Part 1 and Part 2, and today’s the third blog in our series on this important event. S&P 500 Index earnings are expected to jump close to 23% in 2021 according to FactSet, as the global economy recovers. Presidential nominee Joe Biden has made it very clear he will likely hike taxes, which could potentially cut 10 percentage points off earnings growth next year if implemented. If Biden wins, we would expect Chinese tariffs to be removed as well, which would offset some of that impact and according to our friends at Strategas Research Partners would suggest earnings growth of nearly 17%. As shown in our LPL Chart of the Day, how the US dollar does ahead of the election has been a great indicator of which party might win in November. If the dollar is weak three months before the election, this bodes well for the incumbent party, while the incumbent party tends to lose if the dollar is strong. This signal has been right 7 of the past 8 elections. As we saw back in March, when trouble hits, the US dollar tends to do well, as investors flock to the safety of the world’s reserve currency. When things are calm, the dollar tends to weaken, which favors riskier assets. So far, the dollar is slightly lower, which would suggest a potential win for President Donald Trump. Also, the size of the tax increase proposed by Joe Biden as a percentage of gross domestic product (GDP) would be one of the largest ever and rival President Lyndon B. Johnson’s (LBJ) tax increases in the late 1960s. Let’s remember though, if there’s a split Congress, the chances of the full tax plan being implemented is quite slim. Additionally, a weaker economy would also reduce the chances of a large tax hike. Election Charts You Need To See: Part 2 As we noted last week, the demand for election charts is off the charts (pun intended), so we are sharing some of our favorite election charts. Without further ado, here are some more election charts you need to know as November 3 inches closer. How stocks perform three months before the election has a stellar track record of predicting who will win in November. If stocks are higher, the incumbent party tends to win, while if stocks are lower, the incumbent party tends to lose. This indicator accurately predicted the winner 87% of the time (20 of 23) since the late 1920s. Building on this, if President Donald Trump is going to win, right about now is when the S&P 500 Index should start to outperform. Of course, if it weakens, it could mean we will be looking at a President Joe Biden soon. Speaking of presidents up for re-election, here’s what the S&P 500 historically has done during re-election years. Lastly, here are two final charts that may help forecast the outcome. If real per capita disposable income is higher, the incumbent president usually wins. Conversely, if wages are weak, that bodes well for someone new in the White House. Given real per capita disposable income is up more than 7% this year, it would suggest President Trump should take more than 70% of the votes. Of course, this is greatly skewed due to the CARES Act, so we’d put a major asterisk next to this one. To sum up, Gallup poll approval ratings have done a nice job of predicting how many votes a president up for re-election might get. With a 42% Gallup approval rating currently, this comes out to 49% of the total votes for President Trump, which points to a close race. Sell(ing) Rosh Hashanah, Buy Yom Kippur As the High Holidays approach you may remember the old saying on the Street, “Sell Rosh Hashanah, Buy Yom Kippur.” It gets tossed around every autumn when the “high holidays” are on the minds of traders as many of their Jewish colleagues take off to observe the Jewish New Year and Day of Atonement. The basis for this, “Sell Rosh Hashanah, Buy Yom Kippur,” pattern is that with many traders and investors busy with religious observance and family, positions are closed out and volume fades creating a buying vacuum. Even in the age of algorithmic, computer, and high frequency trading these seasonal patterns persist as humans still need to turn the machines on and off and feed them money or take it away – and these algorithms and trading programs are written by people so the human influence is still there. Holiday seasonality around official market holidays is something we pay close attention to (page 100 Stock Trader’s Almanac). Actual stats on the most observed Hebrew holidays have been compiled in the table here. We present the data back to 1971 and when the holiday falls on a weekend the prior market close is used. It’s no coincidence that Rosh Hashanah and Yom Kippur fall in September and/or October, two dangerous and sometimes opportune months. Perhaps it’s Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times. While being long Yom Kippur to Passover has produced 59% more advances, half as many losses and average gains of 6.7%. This year the high holidays commence on Friday eve, September 18, and end Monday September 28 with Yom Kippur just before Octoberphobia. The current news flow already has folks selling ahead of the Jewish High Holidays, quite possibly setting up the market for further declines. S&P 500 down 24 of 30 during week after September options expiration, average loss 0.95% The week after September options expiration week, next week, has a dreadful history of declines most notably since 1990. The week after September options expiration week has been a nearly constant source of pain with only a few meaningful exceptions over the past 30 years. Substantial and across the board gains have occurred just four times: 1998, 2001, 2010 and 2016 while many more weeks were hit with sizable losses. Full stats are in the following sea-of-red table. Average losses since 1990 are even worse; DJIA –1.01%, S&P 500 –0.95%, NASDAQ –0.95% and a sizable –1.42% for Russell 2000. End-of-Q3 portfolio restructuring is the most likely explanation for this trend as managers trim summer holdings and position for the fourth quarter.
Here are the current major indices pullback/correction levels from ATHs as of week ending 9.18.20- Here is also the pullback/correction levels from current prices- Here are the current major indices rally levels from correction low as of week ending 9.18.20-
Stock Market Analysis Video for September 18th, 2020 Video from AlphaTrends ShadowTrader Video Weekly 9.20.20 Video from ShadowTrader
Here are the most anticipated Earnings Releases for this upcoming trading week ahead. ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 9.21.20 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 9.21.20 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Tuesday 9.22.20 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 9.22.20 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 9.23.20 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 9.23.20 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 9.24.20 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 9.24.20 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 9.25.20 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Friday 9.25.20 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And finally here is the most anticipated earnings calendar for this upcoming trading week ahead- ($COST $AZO $NKE $ACB $RAD $GIS $KMX $SFIX $AYTU $JKS $FDS $DRI $ACN $TNP $KBH $BB $CTAS $NEOG $WOR $JBL $QTT $CNTG $TCOM $NTWK $MTN $FUL $CAMP $SANW $AIR $AIH $SCHL $ERYP) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning September 21st, 2020 <-- click there to view!
FAANG stocks looking a bit oversold and at support levels. Short covering and buying could give us a nice run back up to IBD buy levels.
The work from home trade is back it seems like Those stocks that would benefit from people staying at home are mostly up today and those reopening trades such as retail/materials/industrials are down big
For the last couple of weeks, I felt like we dropped little by little but nothing that would have flushed the bulls out, maybe we need a couple more days like today to find the bottom
85% of stocks were down today, and it just looks like we got dip buying. We may have hit bottom for the week. Think we still get a push down later.
I don't like entering unless the market is at a meaningful entry level. So, it took some time, but it's time baby!
NAS Futures looking Bullish with double cups formed on the 5 min. chart. Very obvious and looking textbook so far. We`ll see if it turns out to be a bull trap or not today.
